Fed Says U.s. Economy Strong

Rate Hike Sufficient, Posted on June 18, 2015

The U.S. economy is growing moderately after a winter swoon and is likely strong enough to support an interest rate increase by the end of the year, but concerns remain over the recovery of the labor market, U.S. Federal Reserve officials said on Wednesday. With the economy still on track to grow as much as 2% for the year, the central bank's latest policy statement keeps it on track for at least one and perhaps a second rate increase later this year.


The U.S. dollar languished at one-month lows early on Thursday, having suffered a setback after the head of the Federal Reserve disappointed some who had hoped for a clearer signal on when the central bank will lift interest rates. The Dollar Index fell as far as 94.114 - a low last seen on May 19 - turning around from 95.178. It last stood at 94.149. Even the euro climbed to a one-week high of $1.1358, despite the risk of a debt default by Greece, which is still unable to strike an agreement with its creditors on a deal to unlock fresh funds. Against the yen, the dollar slipped to 123.430, from a high of 124.465. The only major currency that failed to capitalize on the broadly softer greenback was the New Zealand dollar, which sagged on data showing economic growth slowed markedly in the first quarter. New Zealand's economy grew a tepid 0.2% in the quarter, the slowest rate in two years. That took the annual growth rate to 2.6%, from a seven-year high of 3.5%.


Greece's leftist government faced a barrage of warnings on Wednesday that it risked being forced out of the euro zone and left without support if it failed to strike a swift aid-for-reforms deal with its creditors. Athens must find a way out of the impasse by the end of June, when it faces a 1.6 billion euro ($1.8 billion) repayment due to the International Monetary Fund, potentially leaving it bankrupt and on the verge of exiting the euro zone.


Oil prices slipped on Thursday after U.S. government data showed that gasoline stocks and distillate inventories rose last week, although falls were checked by continuing Middle East geopolitical tensions. U.S. July crude edged down 16 cents to $59.76 a barrel as of 0140 GMT after falling 5 cents in the previous session. Brent August crude shed 8 cents to $63.79 a barrel after it settled 17 cents higher on Wednesday at $63.87.


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